New ownership for Home Valley
Branches reopened as South Valley Bank & Trust
From our weekly issue dated July 28, 2010
A sign in front of the Cave Junction branch flashes a message of reassurance. (IVN photo)
Founded in Illinois Valley in 1980, Home Valley Bank (HVB) was ordered closed as of Friday, July 23, because of insolvency, but all its branches are reopened under a different firm with no interruption in service or major staff changes.
Closure of Home Valley is linked to large nonperforming loans in the construction industry.
The closure order was issued by the Oregon Dept. of Consumer & Business Services, and the Federal Deposit Insurance Corp. (FDIC) was appointed as receiver.
HVB had four branches in Grants Pass; one in Cave Junction. All its deposit accounts have been transferred to South Valley Bank & Trust, of Klamath Falls, and are available immediately.
All former Home Valley offices reopened Monday, July 26 as South Valley Bank & Trust. Depositors were informed that they can continue to access their accounts through automated teller machine transactions, checks, and debit transactions. And for loan customers it“s business as usual.
“I look at it as these are the same great people “ the bank“s just got a different name on it,“ said customer Gary Braden at the Cave Junction branch on Monday morning.
Customers should see no disruption in services.
“South Valley Bank & Trust is excited to become a part of the Grants Pass Region and looks forward to being able to continue the proud tradition of community-based banking throughout the historic Grants Pass and Cave Junction communities,“ said William E. Castle, president and chief executive officer, South Valley Bank & Trust.
“We welcome the former Home Valley clients into our network of 23 South Valley branches serving all of Central and Southern Oregon. South Valley looks forward to working with the Home Valley team, who have served their community so well.“
Said Dave McLaughlin, South Valley Bank“s senior vice president and branch administrator, “We don“t want to change any of the sponsorships or anything that Home Valley is a part of in the community. We plan to stay right on track.“
HVB is headquartered in Grants Pass. As of March 31, 2010, it had total assets of approximately $258 million and total deposits of $229 million. South Valley Bank & Trust has total assets of some $600 million and total deposits of $500 million.
South Valley has 18 offices in Klamath Falls/Lakeview, Central Oregon, and Rogue Valley.
Because South Valley is acquiring all of Home Valley“s operations “ including its deposits, loans, and the majority of its assets “ there will not be any losses for former HVB depositors who have deposits exceeding the FDIC deposit insurance amount, McLaughlin said.
Home Valley“s capital levels had dropped so low that the bank became insolvent, said David Tatman, administrator of FDIC“s Division of Finance & Corporate Securities. The primary cause for its problems was a heavy dependence on loans for local construction projects.
Because of the continued downturn in the Southwestern Oregon economy, those loans were not performing, dragging down capital and earnings, he said.
“Despite efforts by the Home Valley Bank management to turn things around, the bank was not able to recover in this current economic environment,“ Tatman explained.
Declining real estate values and general economic weakness continue to pose problems for banks in Oregon and across the country. There were 140 bank closures nationwide during 2009, including three in Oregon, and more than 100 banks in the country have closed so far this year.
Home Valley is the second Oregon bank to close in 2010. Each time a bank has closed in Oregon, another bank has taken over the deposits of the failed bank. No Oregon depositor has lost money as the result of a bank closure.
Nonperforming real estate loans are particularly challenging for Oregon banks. Many loaned a significant amount of money to developers for construction projects, and those developers have been unable to make payments during the economic downturn. Several Oregon banks have had success raising capital to offset some of those losses until the economy recovers.
“We are pleased to see investors showing confidence in our region by infusing capital into Oregon banks,“ said Cory Streisinger, director of the Oregon Dept. of Consumer & Business Services.
“However,“ she noted, “raising capital can be challenging, and for that reason we may see additional contraction among our community banks during this economic downturn.“
The FDIC has established a Website and a toll-free phone number to answer questions from depositors, creditors, and other interested parties regarding the receivership of Home Valley Bank. The website is http://www.fdic.gov/bank/individual/failed/homevalleyor.html, and the toll-free phone number is 800-528-4893. The phone number will be operational from 8 a.m. to 8 p.m. PDT.
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